UPPER POTTSGROVE — A potential 7 percent hike in the township’s sewer rates would be nearly erased if the state paid its bills on time, township officials said this week.

For the past four years, the township has managed to avoid a property tax hike and it’s closing in on a fifth consecutive year of no tax increase.

“Right now, we’re on pretty solid ground for recommending no tax hike for 2014,” Township Manager Jack Layne said Tuesday. “If that comes to pass, it will be five years in a row.”

But the same may not be able to said for sewer rates, which also have held steady for four consecutive years.

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However, it’s not for lack of trying.

In the past week alone, an estimated shortfall of more than $141,000 in the sewer fund, presented at the Oct. 21 commissioners meeting, has been cut to about $80,000, Layne said. “It’s still a moving target and we’re still looking for ways to cut further.”

If the deficit remains at $80,000, that would translate into a rate increase “close to 7 percent, which works out to about $15 a quarter for a household,” Layne said.

That’s down from a 13 percent rate hike that would have been implemented if the $141,000 deficit had remained uncut.

The $1.2 million sewer budget would be a lot easier to balance if the township received the $54,000 it is owed by the Pennsylvania Department of Environmental Protection. For more than two years, the township has been awaiting the money from the DEP, a reimbursement payment for sewer work over the years.

Layne told the commissioners last week that the office of state Sen. Bob Mensch, R-24th Dist., has now involved itself and DEP has “gone from saying they don’t have the money, to saying it’s just a matter of paperwork. I told them it’s not like we need it in the first quarter, we just need to know it’s coming in 2014 so we can budget for it.”

The sewer system in Upper Pottsgrove serves just over 12,000 properties. Other properties in town are served mostly by on-site septic fields.

Financial advisor Matt Dallas explained to the commissioners last week that the sewer fund began 2013 with $175,000 in cash reserves, all of which was consumed by unexpected expenses at pump stations, repairs at the Pottstown Wastewater Treatment Plant and a $259,000 fine from the Pottstown Borough Authority. The fine was for sewage flows in 2011 that were over the township’s purchased capacity at the plant.

“The problem (which caused the overflows) has been rectified but the fine was not reconciled until 2013,” Dallas explained.

Unexpected repairs at the Pottstown Wastewater Treatment Plant, which is the ultimate destination of Upper Pottsgrove’s sewage, were also a factor. Under the agreement with the authority, all three surrounding townships which send sewage to the plant are responsible for a portion of repairs and capital projects at the plant and in the Pottstown delivery system.

“We consumed the piggy bank,” Dallas said of the sewer fund’s 2013 surplus, adding that the 2014 budget starts with a surplus of $0.

“It’s been a tough year for sewer,” he said.

Further, Dallas said the Pottstown Borough Authority is planning $1 million in capital projects in 2014 — 4 percent of which is Upper Pottsgrove’s responsibility to pay.

Although that amounts to $40,000, Dallas said past experience has convinced township budgeters to add another $25,000 to this budget line to pay for unanticipated costs at the sewer plant.

“If something breaks at the plant, the township will be obligated to help pay for it,” Dallas said.

Dallas and Layne told the commissioners that the township is budgeting for only 75 percent of the engineering costs it anticipates paying in 2013 and has been using highway crews to do as much of the sewer repair work as possible, “which saves us quite a bit of money,” Layne said.

The largest expense in the sewer budget is debt, according to Dallas.

Just about 42 percent of the sewer budget is payments on debt principal and another 17 percent on interest on that debt, he said.

In 2013, that worked out to $525,000 in payments on debt principal and $215,000 on interest in that debt, Dallas said, according to an audio recording of the Oct. 21 meeting at the “One Voice” community web site operated by commissioners candidate John West.

“So a little more than half the sewer fund is debt,” Dallas said.

Only 29 percent of the budget is operations and another 11 percent is reimbursement to the general fund.

As for the general fund budget, which is funded through property taxes, it will have $300,000 in reserves carried over from 2013 and is expected to add another $2,000 in surplus in 2014, according to the budget as it now stands.

Dallas told the commissioners that the only major change in the general fund budget since the Sept. 30 meeting at which he last reviewed it was a $10,000 increase in insurance costs — an 18.17 percent increase. This increase is offset somewhat by a 4.8 percent increase in total general fund revenues, much of which is due to an uptick in earned income tax collections — an increase due to a technical change in the way the tax is collected. He called the increase “a one-time gift.”

About the Author

Evan Brandt has worked for The Mercury since November 1997. His beat includes Pottstown, the surrounding townships and the Pottstown and Pottsgrove school districts, as well as other varied general topics like politics, the environment and education. Reach the author at ebrandt@pottsmerc.com
or follow Evan on Twitter: @PottstownNews.